As U.S. President Donald Trump launched his chaotic trade war — with everybody — he’s focused on the power of the U.S. manufacturing industry.
Or its potential to build back.
But can America build back its apparel manufacturing muscle? The big brands say no, not in any real way. But those still producing in the U.S., at least some of them, call that B.S., and say there are areas, like knit T-shirts and sweatshirts, that are ready to come charging back.
One thing’s for sure: For U.S. fashion production to regain its footing, it’s going to take some major changes — to hearts, minds and supply chains.
Domestic manufacturers added 10,000 jobs last month, despite a 1,200-person decline at apparel factories. Trump wasted no time taking credit for the industry’s overall gains, noting the last year of President Joe Biden’s administration saw losses of 9,000 a month on average.
“Since the beginning of NAFTA, there’s been 90,000 plants and factories closed in this country,” Trump said, referring to the North American Free Trade Agreement, which launched in 1994. “That’s a terrible statistic and we’re going to be turning that around.”
Trump specially pointed to motor vehicle and parts producers, which added 8,900 jobs for the month, making up the lion’s share of the manufacturing gains.
“We’ve not only stopped that manufacturing collapse, but we’ve begun to rapidly reverse it and get major gains,” the President said. “We gained all of those jobs, 10,000 jobs and we’ve barely started yet. I’m even a little surprised.”
That rhetoric is nothing like reality — at least in fashion.
Employment in U.S. apparel manufacturing has plummeted to less than one-tenth of what it was 35 years ago — down to 83,500 workers from the 924,900 on the payrolls in 1990, according to the Bureau of Labor Statistics.
To try to reverse the manufacturing trend, Trump has ratcheted up or threatened tariffs on countries and specific goods — 20 percent on shipments from China, 200 percent on Champagne.
All together he has promised to boost duties at more than any time since President Herbert Hoover signed the Smoot-Hawley Tariff Act in 1930, a protectionist move that is widely seen as extending The Great Depression.
And fashion is feeling the pressure.
Taking in Tariffs
Morris Goldfarb, chairman and chief executive officer of Donna Karan and Karl Lagerfeld parent G-III Apparel Group, said just over 30 percent of the company’s goods are now made in China. That’s less than half what the company was making in China before it diversified. Now, 76 percent of its products come from China, Vietnam or Indonesia.
Goldfarb expects to have to raise prices in the mid- to high-single-digit range, holding steady for $5 T-shirts and making up for it with a $5 to $10 bump up on more expensive coats.
G-III’s production might move between countries, but the CEO doesn’t see it coming back to the U.S., where the company got its start in New York’s Garment District.
Goldfarb said he understands the value of producing domestically, with quicker turns and the ability to respond to trends.
“But the likelihood of anything scalable happening in the sector that we operate in is not very good,” he said. “I don’t believe that we can build scale to replace what we import. We’d love to support our own country. We look at opportunities regularly. We visit states to see the locations that are available, the labor force, all of it. And it doesn’t add up to the scale that we need in the diverse classifications that we produce.”
The U.S. spent more than three decades trading away its apparel production capacity and bringing it all back would be the project of years, even if it were Washington’s top priority.
But there are pockets of potential.
What Could Be Made in the U.S.
Bayard Winthrop, CEO of the Made in USA brand American Giant, said there’s plenty of capacity to make knit goods, like T-shirts and sweatshirts, in the U.S., even for big brands.
“There’s a lot of companies that can make T-shirts and sweatshirts [in the U.S.], ones that can do it at scale,” Winthrop said. “That knowledge, those connections, those relationships take time. But it’s there. That is a question of networking and spending some time getting people out in the field and learning the lay of the land standing up in a facility.”
American Giant is an example of that since the brand last year inked a deal to start selling Made in USA cotton T shirts in 1,700 Walmart doors.
The Walmart line went from zero to hundreds of thousands of units and Winthrop said there was “no friction in the supply chain at all.”
“We had some friction on the needle, but none in the supply chain,” he said. “That gives you a sense.”
Winthrop said brands and retailers willing to make longer-term order commitments could start selling domestically made T-shirts in as little as six months.
Paying Up
The kicker is cost.
While Walmart sells some T-shirts made overseas for $4.98, the retailer’s American Giant T-shirts go for $12.98.
Winthrop pinned much of that on the cost of workers in the U.S.
Using back of the envelope math, he said a specialty store in the U.S. selling an imported T-shirt for $25 is probably seeing a a 70 to 80 percent margin, with about $6 of input costs, including $3 for labor.
In the U.S., labor will cost two to three times as much.
“If margin requirements remain the same, maybe it becomes a $35 T-shirt” instead of $25, he said.
So the T-shirt can be made, but it could be a tough sell to consumers at the mass level.
“There’s been a structural shift towards much cheaper stuff,” Winthrop said. “And the consumer base has gotten conditioned for that.”
Manufacturing Chops
Brands also have gotten away from the factory.
“They’re not manufacturing businesses anymore,” Winthrop said of the big importers. “They’re not in the business of making clothes. They’re in the business of real estate transactions and marketing. And so to go build back in that capability is really, really hard. And it’s expensive. And so it looks to them like this very daunting, impossible task and it’s going to be more expensive.”
Winthrop said that when brands say, “You can’t do that or this” what they really mean is “it’s outside of our zone of capability, our zone of expertise.”
But that U.S. production expertise does exist still in some areas.
Kevin McCarter, president and owner of Clover Knits in Clover, S.C., bought the company in 2000.
“Back then it was as much as you could make, as fast as you could make it,” McCarter said. “And then this thing called free trade broke out, which is inevitable. It’s a global economy and it was going to happen. So our customer base just totally changed.”
The Other Impact of Tariffs
Clover Knits still does some basic fabrics for apparel, but does a lot more technical fabrics, for things like flame retardant workwear.
Tariffs aren’t always helpful for U.S. producers, who themselves are plugged into international supply chains.
“We have a lot of customers who do business in Canada and in Mexico,” he said. “They might have a fabric that they have a special process that they apply in Canada. If they ship it up there and if they ship it back with a 25 percent tariff, you could do the math.”
Dyes also come from overseas and are subject to tariffs.
But the increase in duties out of Washington has helped generate some interest.
“But we have received some calls with folks saying, ‘Hey, we want you to make a sample, give us pricing and let’s see what work,’” McCarter said. “I don’t think everything can be made here now, that’s probably not going to be as cost competitive if you’re competing against very low labor rates. But there are some apparel programs that certainly can be made here — from T-shirts that are fairly simple and then fleece products that are fairly simple.
“The bottom line is, there is capacity. We get calls from brands all the time, and we did during COVID[-19],” McCarter said. “We did a huge fleece program for a big name store when they were having trouble getting container loads of garments sent. And it was at a price premium.
“It was probably 30 percent more than their imported [styles], 40 percent more,” he said. “And they advertised it as Made in USA. And those things sold out in the holidays quicker than anything did. I tried to go on and buy some garments and they were all sold out.”
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It appears every other Thursday.
